ST. LOUIS—The industrial market in this Midwestern city has been solid for several years, and turned in another great performance in 2015, according to data just published by Cushman & Wakefield. The recovery of the auto industry helped drive strong demand in the region, the firm found, and the market recorded net occupancy gains of 463,000 square feet in the fourth quarter, closing 2015 with a total of 2.28 million square feet of positive absorption. Developers have taken note of these strong numbers, and have launched a number of projects to close the gap between supply and demand.
“With almost 3.28 million square feet under construction, we expect the St. Louis industrial market to experience another strong year in 2016,” says market leader Brian Ungles.
Even though developers added almost 1.9 million square feet of new inventory in 2015, the fourth quarter vacancy rate remained 140 bps below the historical average for the market, according to C&W. 2015 closed with an overall vacancy rate of 6.5%, slightly down from 6.7% as compared with the fourth quarter of 2014.
The North County region experienced the strongest fourth quarter of all submarkets with 542,000 square feet of positive absorption, bringing its year-end total to 520,000 square feet.
C&W says developers will complete a host of speculative buildings in the first half of 2016, “leading to a flurry of large transactions.” Additional speculative buildings are being planned in the Metro East, North County and St. Charles County submarkets.
One significant change hitting the industrial market here is that users are starting to clamor for buildings with 36‘ clear ceiling heights, whereas before 32′ was the rule.
For example, last summer, just days after another group announced it was launching a massive speculative building in the Metro East submarket, officials from PCCP, LLC and its joint venture partner TriStar Properties said they would finish a 717,060 square foot, class A industrial warehouse building within Gateway Commerce Center in Edwardsville, IL, also in Metro East, by the end of the year. And both of these buildings will feature 36′ clear heights.
“Warehouse requirements have been changing and as big boxes are driving the industrial market, clear heights have also pushed upwards,” Dorian Farhang, assistant vice president with PCCP, told GlobeSt.com. “Not all tenants need the added clear height and certainly sticking with a 32′ clear for our new building was in the discussion. But we chose to provide a 36′ clear building in order to provide the highest quality and most functional building to the market that will be able to accommodate a wider range of prospective tenants.”